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Mortgage confusion means slow recovery from crisis

The state is expected to receive $43 million this month, its share of the historic $25 billion settlement paid out by five big banks in the wake of the mortgage and foreclosure crisis.

State officials said there has been change in the foreclosure climate in New Hampshire, but the process is slow and painful for many.

The settlement was designed to motivate the five biggest banks to work with homeowners through loan modification or principle reduction. The banks are supposed to reach certain financial benchmarks to avoid paying huge penalties, but at this point, the correction is off to a slow start.

Mark Peabody, of Milan, said he's mired in a foreclosure battle. He bought a house and land in Coos County more than 20 years ago. Five years ago, when a broken ankle interrupted his job as a heavy machine operator, he and his wife converted their home into the Mahoosuc Inn.

"We have people literally from all over the world that come here," Peabody said.

But while his business was gathering steam, Peabody has been dealing with a five-year foreclosure fight. He said it started with a simple question about a loan modification when suddenly, his mortgage changed hands from Countrywide to Bank of America, and that's when he said the nightmare really began.

"I did make notes of who I was talking to, well over 20 different representatives of Bank of America, including six different supervisors that I've dealt with," he said.

Peabody and his attorney said they have sent and resent paperwork. Six months ago, they got a temporary injunction from Superior Court to hold off the foreclosure auction.

"The Superior Court judge told the Bank of America attorneys that they need to produce the original promissory note," said attorney Marghie Seymour. "We're still waiting for the original promissory note."

Multiple calls to Bank of America attorneys were not returned to News 9.

At the New Hampshire Attorney General's Office, a foreclosure hotline has buzzed with more than 2,000 calls since it was set up on March 1. Assistant Attorney General Rob Adams said New Hampshire homeowners are being helped.

"The short answer to that is yes, but the longer answer is that it's taking longer to roll out than anybody wanted," he said.

Adams said states are still in the roll-out period of the settlement, and he's heard many complaints that sound just like Peabody's.

According to the settlement, the banks Citigroup, GMAC, J.P. Morgan Chase, Wells Fargo and Bank of America need to do $19 million worth of principle reductions or other loan modifications.

"The banks now have incentive to make some of these adjustments because otherwise, they'll be paying that amount as a fine, and they are also penalized if they don't do it quickly enough," Adams said.

In June, the state hosted a foreclosure roundtable meeting, bringing together many state agencies, attorneys, bank representatives and disgruntled homeowners to sound off about the foreclosure crisis. Grafton County Register of Deeds Kelley Monahan attended the session and said there are hurdles to overcome when trying to figure out foreclosure disputes.

"You've got a wall between you and the person you're dealing with because you don't know at any given time who you need to be dealing with," she said.

Monahan said complications arise when using the Mortgage Electronic Registration System, or MERS. According to its website, MERS "tracks the changes in servicing rights and beneficial ownership interests in mortgage loans," which means it keeps track of which bank holds the promissory note on a piece of property.

Before the mortgage crisis, those documents were linked for the life of the mortgage. But that's not the case anymore.

"Then it went into the mix. It went into securitization," Monahan said, meaning that the note and mortgage aren't necessarily linked.

And she said it can be impossible to figure out who to talk to.

The 13 members of the MERS board of directors are employees of banks or investment companies. MERS did not return News 9's calls to its Virginia headquarters.

Monahan said the new, computerized system creates problems for a county like hers. Grafton County has land records that date back to 1772 and is fighting to keep them local. And rural Grafton County has limited Internet connectivity, making the fight against foreclosure even tougher for homeowners.

Those on the front lines of the foreclosure fight said the separation of mortgages from promissory notes is at the heart of the chaos homeowners face.

Manchester resident Mike Dillon said that because no institution has been able to produce the note on his home, he has a permanent injunction blocking banks from foreclosing on it. He has spent the past 10 years helping other homeowners fight to keep their homes through his company Stellionata, which offers low-cost advice.

"What we do with chain of title analysis and securitization analysis and foreclosure defense litigation support is absolutely beneficial to an attorney," Dillon said.

Peabody and his lawyer got advice from Stellionata and did something else.

"I'm going to escrow this and fight this to its fruition," Peabody said.

Peabody said nearly $50,000 ready to pay, but he's just not sure who should get it.

Part of the national foreclosure settlement includes one-time payments to people who erroneously lost their homes to foreclosure between 2009 and 2010. The restitution averages about $1,800. July 31 is the deadline to apply.

If you're fighting foreclosure and need help, call the New Hampshire Foreclosure Hotline at 866-522-4450.

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